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March 22, 2011, 1:44 AM EDT
By Bloomberg News
March 22 (Bloomberg) -- China Telecom Corp., the country’s biggest fixed-line carrier, posted fourth-quarter profit that rose 42 percent yet missed analyst estimates as costs to add subscribers at the company’s mobile-phone unit increased.
Profit excluding gains from connection fees rose to 2.67 billion yuan ($407 million) in the three months ended Dec. 31, from 1.88 billion yuan a year earlier, the Beijing-based company said in a statement on its website today. That compares with the 3.06 billion yuan average of nine analysts’ estimates compiled by Bloomberg.
Chairman Wang Xiaochu boosted mobile subscribers 61 percent last year by using handset subsidies and promotional calling rates to grab share from market leaders China Mobile Ltd. and China Unicom (Hong Kong) Ltd. Those costs are slowing profit growth even as Wang battles to stem customer losses at the company’s fixed-line phone business.
Sales in the fourth quarter rose 5.1 percent to 56.2 billion yuan, from 53.5 billion yuan. That compares with the 59.9 billion-yuan average of nine analysts’ estimates.
China Telecom rose 2.7 percent to HK$4.51 at the noon trading break in Hong Kong trading, before the announcement. The stock has gained 11 percent this year compared with a 1.3 percent decline in the benchmark Hang Seng Index.
The number of mobile subscribers increased to 90.5 million at the end of December, from 56.1 million a year earlier, China Telecom said in January. The company ranks third in wireless users in the Asian nation, behind China Mobile and China Unicom.
China Telecom entered the wireless market in 2008 by acquiring the smaller of China Unicom’s two mobile divisions in a government-led revamp of the Chinese mobile-phone industry.
China Telecom spent 6.1 billion yuan on handset subsidies in the first half of 2010, or about 27 percent of the wireless division’s revenue, Wang said in August. The proportion would be lower than 30 percent for the full year, he said at the time.
China Mobile, the world’s biggest phone carrier by users, on March 16 reported fourth-quarter net income rose 3.7 percent to 32.4 billion yuan, beating analysts’ estimates. China Unicom is scheduled to announce results on March 29.
--With assistance from Edmond Lococo in Beijing. Editors: Suresh Seshadri, Chua Kong Ho, Garry Smith
To contact Bloomberg News staff for this story:
To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net
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March 22 (Bloomberg) -- China Telecom Corp., the country’s biggest fixed-line carrier, posted fourth-quarter profit that rose 42 percent yet missed analyst estimates as costs to add subscribers at the company’s mobile-phone unit increased.
Profit excluding gains from connection fees rose to 2.67 billion yuan ($407 million) in the three months ended Dec. 31, from 1.88 billion yuan a year earlier, the Beijing-based company said in a statement on its website today. That compares with the 3.06 billion yuan average of nine analysts’ estimates compiled by Bloomberg.
Chairman Wang Xiaochu boosted mobile subscribers 61 percent last year by using handset subsidies and promotional calling rates to grab share from market leaders China Mobile Ltd. and China Unicom (Hong Kong) Ltd. Those costs are slowing profit growth even as Wang battles to stem customer losses at the company’s fixed-line phone business.
Sales in the fourth quarter rose 5.1 percent to 56.2 billion yuan, from 53.5 billion yuan. That compares with the 59.9 billion-yuan average of nine analysts’ estimates.
China Telecom rose 2.7 percent to HK$4.51 at the noon trading break in Hong Kong trading, before the announcement. The stock has gained 11 percent this year compared with a 1.3 percent decline in the benchmark Hang Seng Index.
The number of mobile subscribers increased to 90.5 million at the end of December, from 56.1 million a year earlier, China Telecom said in January. The company ranks third in wireless users in the Asian nation, behind China Mobile and China Unicom.
China Telecom entered the wireless market in 2008 by acquiring the smaller of China Unicom’s two mobile divisions in a government-led revamp of the Chinese mobile-phone industry.
China Telecom spent 6.1 billion yuan on handset subsidies in the first half of 2010, or about 27 percent of the wireless division’s revenue, Wang said in August. The proportion would be lower than 30 percent for the full year, he said at the time.
China Mobile, the world’s biggest phone carrier by users, on March 16 reported fourth-quarter net income rose 3.7 percent to 32.4 billion yuan, beating analysts’ estimates. China Unicom is scheduled to announce results on March 29.
--With assistance from Edmond Lococo in Beijing. Editors: Suresh Seshadri, Chua Kong Ho, Garry Smith
To contact Bloomberg News staff for this story:
To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net
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